Driving Transformation
from Within
Brought to you by Oracle, in collaboration with Intel®
May 2016
Modern Finance
Modern Finance:
Driving Transformation from Within
CONTENTS
4 Foreword
TABLE 1 WHAT FROM THE FOLLOWING ARE THE EXTERNAL DRIVERS OF CHANGE INFLUENCING
THESE PRIORITIES FOR YOUR BUSINESS?
LANDS ARABIA
FRANCE NY ITALY NETHER SAUDI SPAIN SWEDEN UK
TOTAL GERMA
/ UAE
Macro-economic
performance / growth 36% 35% 32% 38% 22% 49% 41% 32% 31%
Increasing competition 40% 40% 47% 52% 30% 19% 50% 35% 41%
Rising costs of doing business
40% 47% 47% 41% 34% 41% 38% 29% 43%
Greater demand from customers
(service / expectations) 36% 37% 39% 43% 32% 24% 41% 30% 40%
Increasing availability of new
technology 37% 35% 45% 40% 31% 35% 38% 31% 40%
Regulations / legislation change
33% 32% 39% 43% 30% 34% 27% 22% 36%
Industry / sector growth
32% 35% 31% 30% 26% 28% 40% 32% 36%
Emerging market growth
28% 25% 21% 39% 20% 27% 26% 30% 30%
Stakeholder Pressure /
Requirements growth
18% 20% 21% 17% 12% 21% 17% 13% 20%
The cost of doing business continues to rise, however, and the pool of skilled finance professionals is shrinking, which
makes delivering on the boardroom’s expectations increasingly difficult. Over 40 percent of finance leaders reveal they are
being asked to reduce operational costs.
Chief executives expect CFOs to dive deeper into what is happening across the company and get the most out of the
organization’s investment in technology and analytics. This requires finance to apply their knowledge and skills in more
innovative but less familiar ways.
LANDS ARABIA
FRANCE NY ITALY NETHER SAUDI SPAIN SWEDEN UK
TOTAL GERMA
/ UAE
Strongly agree 26% 28% 26% 28% 15% 24% 24% 30% 28%
Somewhat agree 47% 46% 53% 47% 50% 47% 48% 40% 47%
Somewhat disagree
20% 18% 14% 16% 26% 27% 18% 22% 16%
Strongly disagree
5% 4% 3% 6% 7% 2% 5% 4% 6%
Don’t know 3% 2% 5% 3% 3% - 5% 3% 3%
1
The next step, and one that some organizations have already taken, is to bring a Chief Data Officer (CDO) into
the fold. The CIO’s competencies are largely about maximizing technology’s impact on the business rather than
understanding the importance of data itself. CDOs, on the other hand, often have a background in engineering or
mathematics and are most inclined to take a strategic approach to their analysis. Importantly, they know which
questions the business must ask of its data to get the answers it needs.
As the nerve center of the organization, the finance department lies at the junction of every line of business in the
organization. Their unique oversight of the business has made CFOs and their teams instrumental in helping the
boardroom achieve its vision for the future.
TABLE 3 WHICH OF THE FOLLOWING DO YOU SEE PRESENTING THE BIGGEST RISKS TO
FINANCE FUNCTION PERFORMANCE OVER THE NEXT TWO YEARS?
LANDS ARABIA
FRANCE NY ITALY NETHER SAUDI SPAIN SWEDEN UK
TOTAL GERMA
/ UAE
Overall, nearly 60 percent of finance leaders say they are more concerned about the impact of external factors on
the business than of internal ones. The ratio varies of course from country to country, but this sentiment holds across
Western Europe’s major markets including the UK, Germany, France, Italy and Spain.
LANDS ARABIA
FRANCE NY ITALY NETHER SAUDI SPAIN SWEDEN UK
TOTAL GERMA
/ UAE
Outside organisation
(externally-driven change) 58% 46% 48% 60% 54% 87% 47% 66% 53%
Within organisation (internally-
driven change) 30% 41% 31% 28% 32% 13% 43% 23% 33%
No difference 12% 13% 21% 12% 15% - 10% 11% 14%
To add to this, an inability to manage risk effectively or meet customer expectations today has a much more profound
impact on the organization’s financial performance than it used to. A company’s reputation, customer relationships,
and the quality of its processes rank among the biggest determinants of its value, and a blow to any of these elements
could have a dramatic effect indeed.
Managing risk is one of the trickiest tasks for a company because it often demands them to make judgment calls based
on at least some level of speculation. While many large companies have a risk department run by the chief risk officer,
it is the CFO who is usually responsible for identifying, measuring and dealing with risk given their “bigger picture”
view of the organization. This requires them to prioritize each risk to keep the business on course.
Effective risk management helps businesses better prepare for whatever the market throws their way so they can
2
avoid – or at least mitigate – the effects of any potential downturns. Research by EY revealed that companies that do
manage risk well perform three times better on EBITDA (Earnings before interest, taxes, depreciation and amortization)
than those that do not.
An integrated view of key risks and opportunities is vital. By introducing a standardized process to identify, monitor and
respond to threats CFOs will put the business in a position to take action earlier.
It’s also important that potential risks are made transparent to business leaders, who may not have the analytics
expertise to dive into the data itself. Being able to track and summarize risk audits in easy-to-read dashboards allows
decision-makers to take swift, well-informed action for the good of the organization.
Risk management has long had a reputation for being a complex task, and occasionally a thankless one, but its
importance cannot be overstated. A more rigorous approach is the key to managing the shape-shifting threats of the
modern market, and it will fall to the CFO to make this happen.
TABLE 5 IN WHICH OF THE FOLLOWING AREAS ARE YOUR FINANCE SYSTEMS UNDERGOING
THE HIGHEST LEVELS OF TECHNOLOGY CHANGE?
Accounts payable 19% 21% 27% 27% 21% 1.2% 19% 9% 25%
Accounts receivable 24% 30% 26% 35% 23% 8% 30% 12% 28%
General ledger 27% 26% 33% 41% 25% 17% 26% 20% 28%
Asset management 30% 33% 26% 32% 24% 30% 37% 22% 31%
Planning / budgeting /
forecasting 32% 21% 27% 37% 27% 41% 34% 39% 27%
Risk management 30% 32% 31% 34% 26% 29% 34% 22% 29%
Financial Consolidation 31% 26% 26% 32% 29% 46% 30% 33% 24%
External Regulatory Reporting 22% 16% 29% 23% 13% 28% 21% 21% 20%
Internal Management Reporting
24% 21% 28% 24% 21% 32% 16% 24% 22%
Profitability and
Cost Management 31% 24% 24% 32% 13% 50% 37% 38% 21%
Account Reconciliation 22% 18% 17% 17% 15% 28% 24% 27% 23%
Strongly agree 30% 25% 26% 27% 17% 42% 25% 39% 34%
Somewhat agree 44% 49% 50% 49% 41% 35% 52% 35% 38%
Somewhat disagree 20% 19% 17% 20% 30% 21% 15% 20% 22%
Strongly disagree 4% 6% 3% 4% 8% 3% 4% 3% 4%
Don’t know 2% 2% 4% 0.4% 4% - 4% 4% 2%
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